SEBI Reforms Proposed: Parliamentary Panel Suggests Sweeping Changes

A parliamentary panel has put forth significant reforms for the Securities and Exchange Board of India (SEBI) under the proposed Securities Markets Code Bill, 2025. These recommendations aim to enhance regulatory oversight and safeguard investor interests in India’s financial markets.

Strengthening Board Structure and Independence

The panel’s proposals include expanding SEBI’s board and extending the cooling-off period for its senior officials. These changes are designed to strengthen the regulator’s capacity and ensure its independence.

• Board expansion from nine to fifteen members.
• Cooling-off period for chairperson and whole-time members to be doubled to two years.

Doubling the cooling-off period directly addresses potential conflicts of interest, thereby reinforcing regulatory independence within the financial sector.

Streamlining Investigations and Grievance Redressal

To improve the efficiency of regulatory processes, the committee suggested adjusting timelines for complex investigations and grievance resolution. This aims to provide clearer frameworks for handling various complaints and appeals.

• Extended timeline for complex financial misconduct cases from 180 days to one year.
• 120-day limit for ombudsperson complaints.
• 45-day deadline for condoning delays in appeals to the Securities Appellate Tribunal (SAT).

These specific deadlines seek to streamline the resolution of financial disputes, offering more predictability for both regulators and market participants.

Bolstering Investor Protection and New Asset Oversight

Investor protection stands as a core focus of the proposed reforms, with the panel advocating for measures that directly empower retail investors. This includes new requirements and legislative integrations to ensure fairness.

• Mandatory Investor Charter to define investor rights and set fixed grievance redressal timelines.
• Safeguards for retail investors during company delisting processes, integrated into primary legislation.

Furthermore, the committee called for a regulatory framework for virtual digital assets like cryptocurrencies, alongside an interim oversight mechanism. The panel also emphasized differentiating between civil defaults and criminal market abuse, reserving criminal liability for severe systemic misconduct.

The Indian government will now review these recommendations as the Securities Markets Code Bill, 2025, advances through the legislative process.